The reason why the decision in Brito is so important is that Justice Echlin ordered an employer who had provided to its employees a group insurance plan to essentially stand in the disability insurer’s shoes when the employee was dismissed and the employer made no arrangements for the dismissed employee to maintain that insurance coverage beyond the statutory notice period; a decision that cost the employer nearly $200,000 in what was otherwise a modest wrongful dismissal case.

Facts

The decision will make more sense when one considers the facts. As is set out in Justice Echlin’s reasons for decision, the defendant employer, Canac, fabricated cabinetry for kitchens, bathrooms and other family rooms for many years. The plaintiff employee, Mr. Luis Romero Olguin, immigrated to Canada from Chile in the fall of 1979 and from 1979 until July 15, 2003, he worked for Canac. In 2003, Mr. Olguin was dismissed without cause at the age of 55. He was given the statutory minimum payment of 31.79 weeks after nearly 24 years of service, plus benefits for the statutorily mandated minimum period of eight weeks. It was the provision of benefits for only the statutory notice period that was to become the critical point in issue in the case.

Although Mr. Olguin partially mitigated his damages by finding new employment, his new employer did not offer disability coverage as part of its compensation package.

On November 5, 2004, Mr. Olguin underwent surgery for laryngeal cancer, received chemoradiation treatment, and a tracheostomy tube was inserted in his throat until June 1, 2005. Further cancer surgeries were conducted on November 27, 2008, May 28, 2009, October 4, 2009, with more contemplated beyond that.

Justice Echlin’s Decision

Following the trial of the matter Justice Echlin found that Mr. Olguin’s reasonable notice period was 22 months.

On the issue of Mr. Olguin’s entitlement to disability benefits, Mr. Justice Echlin wrote the following:

[12] How should the law deal with the events of the period of November 6, 2004 [the disability
date] to May 15, 2005 [the end of the 22 month notice period]? If it is to place Mr. Luis Romero Olguin into the position he would have been in had Canac provided him with working notice, he would have received his regular cash employment compensation, plus all benefit coverages for the entirety of his 22 month notice period at law.

[13] Canac consciously chose not to make alternative arrangements to provide its loyal, long-service employee with replacement disability coverage. Rather, it chose to go the “bare minimum” route. It provided only the statutory minimums in pay and benefits and then gambled that he would get another job and stay well. When it lost that gamble, it chose to litigate this matter for over five years. When confronted with its potential significant exposure, it raised the argument that Mr. Luis Romero Olguin failed to mitigate his potential damages by purchasing a replacement disability policy.

[14] I reject that argument. The onus is upon Canac to establish the Plaintiff’s failure to mitigate. Canac has failed to do so in this instance. Insufficient evidence was led to show that comparable coverage would have been available and would have provided Mr. Luis Romero Olguin with comparable coverage. While [counsel for the defendant] conceded that in this setting, the law transforms the employee into a “notional employee”, he argued that Mr. Luis Romero Olguin failed to satisfy the “actively at work” requirement contained in the policy wording. I reject this argument and find it to be circular logic to argue that, if the Plaintiff was to be deemed a “notional employee”, then how can it be asserted that he was “not actively at work”?

[15] Canac then conceded that if those defences failed, then Mr. Luis Romero Olguin is eligible for STD coverage. The parties have agreed that these entitlements total: $9,078.94.

[16] After the 17 weeks of STD coverage expired, the question then arises: Is Mr. Luis Romero Olguin entitled to receive damages as a result of loss of LTD coverage. Again, Canac advanced a number of policy defences, none of which succeed in this instance. The plaintiff has discharged his evidentiary burden that he is, “totally disabled” by both viva voce evidence and medical evidence. It then urged that the insurance policy contractually prohibited recovery. I disagree.As the costs of the Canac disability coverage were contributed to by Mr. Luis Romero Olguin, the Supreme Court of Canada has previously decided this issue in Sylvester v. British Columbia [1997] S.C.J. No. 58. … I agree. I therefore award Mr. Luis Romero Olguin compensation at the rate of $5,916.67 for the period from November 6, 2004 to May 15, 2005, plus LTD benefits of an agreed-upon monthly amount of $2,096.04 from March 4, 2005 to March 5, 2007, in addition to the STD benefits referenced previously in paragraph 15 of $9,078.94.

[17] Finally, Canac has urged that the “any occupation” requirement should end its liability (if any) to Mr. Luis Romero Olguin for benefits from March 6, 2005 to age 65. Again, it has failed to discharge its evidentiary burden. I fix and award the sum of $146,723.00 for damages to Mr. Luis Romero Olguin for loss of LTD benefits from March 6, 2005 to the outset of trial. The present value of the remainder of Mr. Luis Romero Olguin’s LTD entitlements to his 65th birthday is a further $47,941.00.

In case one missed the import of the decision, Justice Echlin ordered the employer to pay its dismissed employee the full value of his long-term disability benefits to age 65. Had Mr. Olguin been younger (he was 63 at the time of trial), the cost to the employer could have been substantially higher.

Note that the value of Mr. Olguin’s wrongful dismissal action was only hardly anything after deducting his earnings through mitigation, but the cost of supplying the long-term disability benefits was nearly $200,000!

Decision of the Court of Appeal for Ontario

On appeal to the Court of Appeal for Ontario the employer took the position that Mr. Olguin was never “totally disabled” and therefore was not qualified, under the disability plan, to receive his benefits. The Court of Appeal rejected that line of argument, finding that Justice Echlin was within his rights to find that Mr. Olguin had been, in fact, disabled.

In the alternative, the employer argued that Mr. Olguin had failed to mitigate his damages by finding new employment that offered similar benefits to him. In a short, but potentially powerful statement, the Honourable Justice Cronk held that:

[16] There can be no obligation to mitigate damages by finding alternate employment where the employee is totally incapable of working.

The Court of Appeal did not interfere with Justice Echlin’s decision to order the employer to pay disability benefits.

Commentary

Brito stands as a powerful decision, given the fact that all too often employers terminate an employee’s ability to make claim for long-term disability benefits either at the time of dismissal or, as was the case in Brito, at the end of the statutory notice period.

This blog has previously canvassed the issue of the requirement of an employer to maintain an employee’s benefits throughout the complete common-law notice period (see The Benefit of Benefits) but the point bears repeating.

Section 60 of the Ontario Employment Standards Act, 2000

60. (1) During a notice period under section 57 or 58, the employer…(c) shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee’s benefits under the plan until the end of the notice period.

…

(3) If an employer fails to contribute to a benefit plan contrary to clause (1)(c), an amount equal to the amount the employer should have contributed shall be deemed to be unpaid wages for the purpose of section 103.

(4) Nothing in subsection (3) precludes the employee from an entitlement that he or she may have under a benefit plan.

Decision in Walsh v. Canada Life

The case of Walsh v. Canada Life canvassed the issue of who was responsible, the employer or the insurance company, when the employer terminated the employee’s long-term disability benefits as at the date of termination.

Justice Somers held that, given the express provisions of section 60 of the ESA, and the fact that the insurer was not the employee’s employer, the insurer could not be compelled by virtue of section 60, to insure the employee beyond the date upon which his insurance was terminated (which was the date of dismissal.)

Returning to Brito, if Walsh instructs that an insurance company cannot be compelled to maintain insurance beyond the date upon which the employer (who is typically the insured under the policy of insurance) gives notice that the employee is no longer to be covered, even if the employer is wrong with respect to the date provided, but ESA section 60(4) provides that the employer’s failure to make whatever benefit plan contributions would be required to be made in order to maintain the employee’s benefits does not preclude an employee from an entitlement that he or she may have under that benefit plan, who then must be responsible for making the actual benefit payment? Applying Brito and Walsh the answer is clearly the employer.

Takeaways for Employers with Labour Pains

The takeaway for employers from Brito is serious: employers must turn their minds to the issue of the maintenance of benefits at the time of termination. Not only must employers ensure that a dismissed employee will have continued access to his or her benefits plan throughout the statutory notice period, but they would also be prudent to ensure that that employee has the possibility, and the means, to maintain that coverage throughout his entire common law notice period as well.

If you are an employer in Ontario, before terminating the employment of any of your employees it may be prudent to speak with an experienced employment lawyer first. The professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Takeaways for Employees with Labour Pains

The takeaway for employees is that if an employer fails to provide you with continued access to long-term disability benefits, and something unforeseen and unfortunate happens during the notice period, one may not be totally out of luck.

If you are a worker in Ontario and have been let go from your job, it is time to speak with an experienced employment lawyer; especially if you have concerns with respect to your health and disability benefits. The professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Contact Me

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260. You may also use the contact box at the top of this page.

As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.